FACULTY OF BUSINESS & MANAGEMENT

BACHELOR IN BUSINESS ADMINISTRATION (HONS.) FINANCE

UITM TERENGGANU CAMPUS DUNGUN

GROUP ASSIGNMENT

FINANCIAL ANALYSIS ON FITTERS DIVERSIFIED BERHAD

COURSE CODE

FIN658 – FINANCIAL STATEMENT ANALYSIS

PREPARED BY

MUHAMMAD AMIRUL ASYRAAF BIN ZAINUDDIN 2019689144

MUHAMMAD HARITH FADHILLAH BIN HAMZAH 2019492308
MOHAMMAD ADIB BIN ABDUL MUIN 2019823906
NUR AINA SYAFIQA BINTI MOHD NOOR 2019630168

PROGRAMME / CLASS

BA242 4B

PREPARED TO:

MADAM CHE WAN KHALIDAWATY BINTI KHALID

SUBMISSION DATE:

2/1/2021
Table of Contents
EXECUTIVE SUMMARY................................................................................................................................................... 1
1. INTRODUCTION......................................................................................................................................................... 2
1.1 INDUSTRY ANALYSIS ...................................................................................................................................... 3
1.2 STRATEGIC ANALYSIS ................................................................................................................................... 4
2 FINANCIAL STATEMENT ANALYSIS ................................................................................................................. 5
2.1 FINANCIAL RATIO STATEMENT ................................................................................................................... 5
2.2 COMMON SIZE FINANCIAL STATEMENT .............................................................................................. 10
2.3 COMPARATIVE FINANCIAL STATEMENT ............................................................................................. 12
3 ANALYSIS AND FINDINGS .................................................................................................................................... 18
3.1 FINANCIAL RATIO ANALYSIS ..................................................................................................................... 18
3.2 COMMON SIZE ANALYSIS ............................................................................................................................ 20
3.3 COMPARATIVE ANALYSIS ........................................................................................................................... 21
4 CONCLUSION............................................................................................................................................................ 22
5 APPENDICES ............................................................................................................................................................. 23
EXECUTIVE SUMMARY

This report is an analysis of the financial operation and performance of the company FITTERS Diversified Berhad
from Year 2016 to 2019. The report will provide an assessment of the industry analysis, strategy analysis, financial
ratio analysis, common size analysis and comparative analysis.

In the analysis, we will evaluate on strategy and industry analysis of FITTERS Diversified Berhad from year 2016
to 2019. After completing with comparative analysis using trend index analysis and common size analysis with
latest year financial report and industry financial latest year report and financial ratio. We will evaluate the
strength and weaknesses based on the analysis.

1
1. INTRODUCTION

FITTERS Diversified Berhad (“FITTERS”) Group commenced its business operations as a fire protection
and prevention solutions provider in the 1970s. On 4 October 1994, FITTERS Diversified Berhad gained
official listing on the Second Board of Bursa Malaysia Securities Berhad (“Bursa Securities”) and was
subsequently promoted to the Main Board of Bursa Securities on 4 July 2007.

FITTERS continue to remain as Malaysia’s premier “one-stop” fire protection specialist and is involved in
the manufacturing, trading and specialised installation of fire-fighting equipment as well as the supply of fire
safety protection products and services.

Its segments are Fire services division, which is engaged in manufacturing and trading of safety,
firefighting equipment, industrial products, installation and maintenance of the Fire Department's
privatized computerized fire alarm monitoring system, corrective and preventive maintenance within the
fire industry and specialty construction industry.

2
1.1 INDUSTRY ANALYSIS

There are several points on industry analysis based on Fitters Diversified Berhad:

1. Rivalry Among Existing Competitors

Competitive rivalry is a very strong force that can push company to change its strategy and remake its
decisions. Fitters Diversified Berhad faces severe competition from its rivals. For example in the
renewable energy industry, there are six other company in Lembah Klang which is Plus Solar System,
ERS Energy, GC Renewable Energy, SOLS Energy and Samaiden Malaysia.
2. Threat of Substitute Products and Services
There are number of subtitutes for Fitters. For example in PVC pipe manufacturing, Fitters compete with
Tegas Venture, Bina Plastic Industries and Cew Sin Sdn. Bhd.
3. Bargaining Power of Buyers
The customers have a lot of power when there aren’t many of them and when the customers have many
alternatives to buy from. Moreover, it should be easy for them to switch from one company to another.
The number of buyers is very low for Fitters, making it easier for the buyers to influence the market.
4. Bargaining Power of Suppliers
The number of suppliers in the industry in which Fitters operates is a lot compared to the buyers. This
means that the supplier have less control over prices and this makes the bargaining power of suppliers is
a weak force.
5. Threat of New Entrants
The economies of scale is fairly difficult to achieve in the industry in which Fitters operates. This makes
it easier for those producing large capacitates to have a cost advantage. It also makes production costlier
for new entrants. This makes the threats of new entrants a weaker force.

3
1.2 STRATEGIC ANALYSIS

There are several points on industry analysis based on Fitters Diversified Berhad:

1. Market Penetration
Fitters commenced operations in the 1970s, was listed on the Second Board of Bursa Malaysia in 1994
until its promotion to the Main Board in 2007. Through the years, FITTERS had gained recognition as a
“one-stop” fire protection specialist and continues to engage in manufacturing, trading and specialized
installation of firefighting equipments as well as the supply of fire safety protection products and services.
2. Market Development
Since its promotion to the Bursa Main Board in 2007 and through innovation and entrepreneurship, Fitters
has successfully enhanced value through the Group’s diversification strategies. In 2007, the Group
ventured into property development followed by renewable energy and green mill a year later. In 2013,
Fitters entered a venture with Molecor Tecnologia S.L. and Ricwil (Malaysia) Sdn Bhd to manufacture
and distribute state-of-the-art HYPRO PVC-O pipes in Malaysia and South East Asia.
3. Product Development
Molecor (SEA), a Hypro PVC-O Pipes Manufacturing & Distribution company owned by Fitters
Diversified Berhad, developed and patented the “molecular orientation” technology that gives PVC-O
pipes higher impact resistance and longer lifespan of up to 50 years, compared to the 30-year lifespan of
conventional steel-based pipes. PVC-O pipes produced using Molecor’s technology have a track record
of effective implementations in Australia, Italy, France, Spain, South Africa, and Ecuador.
4. Diversification
FITTERS had diversified through Innovation, Technology and Entrepreneurship into four distinct core
businesses. Their diversification strategy has resulted into a sustainable business model with year-on-year
growth, based on their core competency in engineering. Fitters main core business is Fire Service, Molecor
Hypro PVC-O Pipes, Property Development and Renewable energy.

4
2 FINANCIAL STATEMENT ANALYSIS

2.1 FINANCIAL RATIO STATEMENT

Liquidity Ratio:

1) Current Ratio = Current Assets / Current Liabilities

2016 2017 2018 2019
RM (‘000) RM (‘000) RM (‘000) RM (‘000)
361517 267700 309300 260121
161988 139801 170494 128674
= 2.23 Times = 1.91 Times = 1.81 Times = 2.02 Times

2) Acid Test Ratio = Current Assets – Inventory – Prepayment / Current Liabilities

2016 2017 2018 2019
RM (‘000) RM (‘000) RM (‘000) RM (‘000)
361517 − 41151 − 1689 267700 − 38360 − 1231 309300 − 132517 − 4200 260121 − 125686 − 262
161988 139801 170494 128674
= 1.98 Times = 1.63 Times = 1.01 Times = 1.04 Times

3) Net Working Capital = Current Assets – Current Liabilities

2016 2017 2018 2019
RM (‘000) RM (‘000) RM (‘000) RM (‘000)
361517 – 161988 267700 – 139801 309300 – 170494 260121 – 128674
= RM 199529 = RM 127899 = RM 138806 = RM 131447

5
Activity Ratio:

1) Average Collection Period = Account Receivables / Sales X 360

2016 2017 2018 2019
RM (‘000) RM (‘000) RM (‘000) RM (‘000)
58717 66708 112313 83374
x 360 𝑋 360 𝑋 360 𝑋 360
366076 303404 350733 263004
= 57 Days = 79 Days = 115 Days 114 Days

2) Account Receivables Turn Over = Sales / Account Receivables

2016 2017 2018 2019
RM (‘000) RM (‘000) RM (‘000) RM (‘000)
366076 303404 350733 263004
58717 66708 112313 83374
= 6.23 Times = 4.55 Times = 3.12 Times = 3.15 Times

3) Inventory Turn Over = Cost of Goods Sold / Averages Inventories

2016 2017 2018 2019
RM (‘000) RM (‘000) RM (‘000) RM (‘000)
315192 258922 293299 222014
(41151 + 29640 ÷ 2) (38360 + 41151 ÷ 2) (132517 + 38360 ÷ 2) (125696 + 132517 ÷ 2)
= 8. 90 Times = 6.51 Times = 3.43 Times = 1.72 Times

4) Fixed Assets Turn Over = Sales / Net Fixed Assets

2016 2017 2018 2019
RM (‘000) RM (‘000) RM (‘000) RM (‘000)
366076 303404 350733 263004
235811 + 5684 244189 + 5684 251914 + 5606 229518 + 5528
= 1.52 Times = 1.21 Times = 1.36 Times = 1.12 Times

6
 5) Total Assets Turn Over = Sales / Total Assets
2016 2017 2018 2019
RM (‘000) RM (‘000) RM (‘000) RM (‘000)
366076 303404 350733 263004
611244 555293 601234 548298
= 0.60 Times = 0.55 Times = 0.58 Times = 0.48 Times

Leverage Ratios

1) Debt Ratio = Total liabilities / Total Assets

2016 2017 2018 2019
RM (‘000) RM (‘000) RM (‘000) RM (‘000)
250116 208138 219840 158411
611244 555293 601234 548298
= 0.4092 @ 40.92% = 0.3748 @ 37.48% = 0.3656 @ 36.56% = 0.2889 @ 28.89%

2) Debt to Equity Ratio = Total Liabilities / Total Equity

2016 2017 2018 2019
RM (‘000) RM (‘000) RM (‘000) RM (‘000)
250116 208138 219840 158411
361128 347155 381394 389887
= 0.6926 @ 69.26% = 0.5996 @ 59.96% = 0.5764 @ 57.64% = 0.4063 @ 40.63%

3) Times Interest Earned = EBiT / Total Interest

2016 2017 2018 2019
RM (‘000) RM (‘000) RM (‘000) RM (‘000)
6580 10982 27116 14058
6210 6271 6081 5123
= 1.06 Times = 1.75 Times = 4.46 Times = 2.74 Times

7
Profitability Ratio

1) Gross Profit Margin = Gross Profit / Sales

2016 2017 2018 2019
RM (‘000) RM (‘000) RM (‘000) RM (‘000)
50884 44482 57434 40990
366076 303404 350733 263004
= 0.1390 @ 13.90% = 0.1466 @ 14.66% = 0.1638 @ 16.38% = 0.1559 @ 15.59%

2) Operating Profit Margin = EBiT / Sales

2016 2017 2018 2019
RM (‘000) RM (‘000) RM (‘000) RM (‘000)
6580 10982 27116 14058
366076 303404 350733 263004
= 0.0180 @ 1.80% = 0.0362 @ 3.62% = 0.0773 @ 7.73% = 0.0534 @ 5.34%

3) Net Profit Margin = EAT / Sales

2016 2017 2018 2019
RM (‘000) RM (‘000) RM (‘000) RM (‘000)
−6459 −3379 14342 4499
366076 303404 350733 263004
= -0.0176 @ -1.76% = -0.0111 @ -1.11% = 0.0409 @ 4.09% = 0.0171 @ 1.71%

4) Return on Investment/Assets = EAT / Total Assets

2016 2017 2018 2019
RM (‘000) RM (‘000) RM (‘000) RM (‘000)
−6459 −3379 14342 4499
611244 555293 601234 548298
= -0.0106 @ - 1.06% = -0.0060 @ -0.60% = 0.0239 @ 2.39% =0.0082 @ 0.82%

8
5) Return on Equity = EAT / Total Equity
2016 2017 2018 2019
RM (‘000) RM (‘000) RM (‘000) RM (‘000)
−6459 −3379 14342 4499
361128 347155 381394 389887
= -0.0179 @ -1.79% = -0.0097 @ -0.97% = 0.0376 @ 3.76% = 0.0115 @ 1.15%

9
2.2 COMMON SIZE FINANCIAL STATEMENT

INCOME STATEMENT FOR THE YEAR ENDED 31

DECEMBER 2019

FITTERS DIVERSIFIED PETRONAS CHEMICALS

BERHAD GROUP BERHAD
Percent Amount
Amount (RM'000) (%) (RM'000) Percent (%)
Revenue 263004 100% 16370 100%
(-) Cost of Revenue 222014 84.41% 11914 72.78%
Gross Profit 40990 15.59% 4456 27.22%
(-) Expenses and Loss of
financial assets 33194 12.62% 1739 10.62%
(+) Other Income 6262 2.38% 523 3.19%
Operation Profit 14058 5.35% 3240 19.79%
(-) Finance Cost 5123 1.95% 85 0.52%
Profit Before Tax 8935 3.40% 3155 19.27%
(-) Tax Expenses 4436 1.69% 360 2.20%
Profit for the Year 4499 1.71% 2795 17.07%

STATEMENTS OF FINANCIAL POSITION FOR THE YEAR ENDED

31 DECEMBER 2019

FITTERS DIVERSIFIED PETRONAS CHEMICAL GROUP

BERHAD BERHAD
Percent Amount
Amount (RM'000) (%) (RM'000) Percent (%)
Assets
Non-Current Assets
Property, Plant and Equipment 229518 41.86% 20482 52.70%
Investment Properties 1305 0.24% - -
Right of Use Assets 12912 2.35% - -
Intangible Assets 5528 1.01% 584 1.50%
Investment in an Associate - - 1058 2.72%
Other Investments 105 0.02% - -
Deferred Tax Assets 272 0.05% 971 2.50%
Trade and other receivables 38537 7.03% -
Total Non-Current Assets 288177 52.56% 23095 59.43%

10
Current Assets
Inventory 125696 22.92% 1658 4.27%
Current Tax Assets 1005 0.18% - -
Trade and other receivables 96450 17.59% 1994 5.14%
Contract Assets 21936 4.00% - -
Other Investment 1 0.00% - -
Cash and short-term deposits 15033 2.74% 12045 30.99%
Tax Recoverable - - 71 0.18%
Total Current Assets 260121 47.44% 15768 40.57%
Total Assets 548298 100% 38863 100%

Equity and Liabilities

Equity
Share Capital 240662 43.89% 8871 22.83%
Treasury Shares -7823 -1.43% - -
Other Reserves 36242 6.61% 21062 54.20%
Retained Earnings 107368 19.58% - -
Total Equity Attributes to
owners of company 376469 68.66% 29933 77.02%
Non-Controlling Interest 13418 2.45% 605 1.56%
Total Equity 389887 71.11% 30538 78.58%
Liabilities
Non-Current Liabilities
Deferred Tax Liabilities 5150 0.94% 906 2.33%
Other long term liabilties and
provision - - 1699 4.37%
Lease Liabilities - - 627 1.61%
Loans and Borrowings 24587 4.48% 1875 4.82%
Total Non-Current Liabilities 29737 5.42% 5107 13.14%

Current Liabilities
Borrowings 71440 13.03% - -
Lease Liabilites - - 78 0.20%
Contract liabilities 7257 1.32% - -
Trade and other payables 49607 9.05% 3063 7.88%
Current Tax Payables 370 0.07% 77 0.20%
Total Current Liabilities 128674 23.47% 3218 8.28%
Total Liabilities 158411 28.89% 8325 21.42%
Total Equity and Liabilities 548298 100% 38863 100%

11
2.3 COMPARATIVE FINANCIAL STATEMENT

TREND INDEX ANALYSIS METHOD

TREND INDEX ANALYSIS

Financial Position 2016 2017 2018 2019

Asset
Non-current assets

Property, plant and equipment 235,811,000 244,189,000 251,914,000 229,518,000

Investment properties 683,000 1,321,000 1,342,000 1,305,000

Intangible assets 5,684,000 5,684,000 5,606,000 5,528,000

Investment securities 2,321,000 2,321,000 105,000

Deferred tax assets 1,111,000 479,000 398,000 272,000

Trade and other receivables 4,117,000 33,599,000 32,569,000 38,537,000

Total non-current assets 249,727,000 287,593,000 291,934,000 288,177,000

Current Assets

Development properties 92,183,000 96,826,000

Inventories 41,151,000 38,360,000 132,517,000 125,696,000

Current tax assets 2,454,000 1,146,000 1,306,000 1,005,000

Trade and other receivables 106,336,000 84,039,000 133,508,000 96,450,000

Contract assets 35,732,000 26,794,000 26,487,000 21,936,000

Investment securities 1,000 1,000 1,000 1,000

Cash and short-term deposits 49,202,000 20,534,000 15,481,000 15,033,000

Assets of a disposal group classified 34,458,000

as held for sale

Total current assets 327,059,000 267,700,000 309,300,000 260,121,000

12
TOTAL ASSETS 611,244,000 555,293,000 601,234,000 548,298,000
EQUITY AND LIABILITIES
EQUITY

Share capital 240,248,000 240,366,000 240,471,000 240,662,000

Share premium 118,000

Treasury shares -5,330,000 -11,663,000 -14,489,000 -7,823,000
42,399,000
Other reserves 35,211,000 30,856,000 36,242,000
99,409,000
Retained earnings 83,907,000 83,577,000 107,388,000
13,604,000
Non-controlling interests 6,974,000 4,019,000 13,418,000

TOTAL EQUITY 361,128,000 347,155,000 381,394,000 389,887,000

Liability
Non-current liabilities

Deferred tax liabilities 1,730,000 3,315,000 5,370,000 5,150,000

Loans and borrowings 86,388,000 64,645,000 43,976,000 24,587,000

Trade and other payables 377,000

Total non-current liabilities 88,118,000 68,337,000 49,346,000 29,737,000

Current liabilities

Loans and borrowings 88,011,000 70,279,000 83,245,000 71,440,000

Current tax liabilities 1,930,000 446,000 2,675,000 370,000

Trade and other payables 65,371,000 55,642,000 78,803,000 49,607,000

Contract liabilities 6,354,000 13,434,000 5,771,000 7,257,000

Liabilities of a disposal group 332,000

classified as held for sale

Total current liabilities 161,998,000 139,801,000 170,494,000 128,674,000

TOTAL LIABILITIES 250,116,000 208,138,000 219,840,000 158,411,000

TOTAL EQUITY AND
LIABILITIES 611,244,000 555,293,000 601,234,000 548,298,000

13
Trend Index Analysis

Asset
Non-current assets 2016(%) 2017 (%) 2018(%) 2019(%)
Property, plant and equipment 100.00 103.55 106.83 97.33
Investment properties 100.00 193.41 196.49 191.07
Intangible assets 100.00 100.00 98.63 97.26
Investment securities 100.00 100.00 4.52 0.00
Deferred tax assets 100.00 43.11 35.82 24.48
Trade and other receivables 100.00 816.10 791.09 936.05
Total non-current assets 100.00 115.16 116.90 115.40
Current Assets
Development properties 100.00 105.04 0.00 0.00
Inventories 100.00 93.22 322.03 305.45
Current tax assets 100.00 46.70 53.22 40.95
Trade and other receivables 100.00 79.03 125.55 90.70
Contract assets 100.00 74.99 74.13 61.39
Investment securities 100.00 100.00 100.00 100.00
Cash and short-term deposits 100.00 41.73 31.46 30.55
Assets of a disposal group classified 100.00 0.00 0.00 0.00
as held for sale
Total current assets 100.00 81.85 94.57 79.53
TOTAL ASSETS 100.00 90.85 98.36 89.70
EQUITY AND LIABILITIES 100.00
EQUITY 100.00
Share capital 100.00 100.05 100.09 100.17
Share premium 100.00 0.00 0.00 0.00
Treasury shares 100.00 218.82 271.84 146.77
Other reserves 100.00 87.63 120.41 102.93
Retained earnings 100.00 99.61 118.48 127.98
Non-controlling interests 100.00 57.63 195.07 192.40
TOTAL EQUITY 100.00 96.13 105.61 107.96
Liability
Non-current liabilities
Deferred tax liabilities 100.00 191.62 310.40 297.69
Loans and borrowings 100.00 74.83 50.91 28.46
Trade and other payables 100.00
Total non-current liabilities 100.00 77.55 56.00 33.75
Current liabilities
Loans and borrowings 100.00 79.85 94.58 81.17
Current tax liabilities 100.00 23.11 138.60 19.17
Trade and other payables 100.00 85.12 120.55 75.89

14
Contract liabilities 100.00 211.43 90.82 114.21
Liabilities of a disposal group 100.00 0.00 0.00
classified as held for sale
Total current liabilities 100.00 86.30 105.24 79.43
TOTAL
LIABILITIES 100.00 83.22 87.90 63.34
TOTAL EQUITY AND LIABILITIES 100.00 90.85 98.36 89.70

15
Income Statement

2,016 2,017 2,018 2,019

Revenue 366,076,000 303,404,000 350,733,000 263,004,000

Less: Cost of sales 315,192,000 258,922,000 293,299,000 222,014,000

Gross Profit 50,884,000 44,482,000 57,434,000 40,990,000
Other income 2,768,000 1,802,000 4,792,000 6,262,000
Less: Administrative expenses 47,072,000 35,302,000 34,396,000 31,095,000
Operating profit 6,580,000 10,982,000 27,116,000 14,058,000
Less: Finance cost 6,210,000 6,271,000 6,081,000 5,123,000
Share of result of associate, net of tax (445,000) 0 0 0

Profit/(Loss) before tax (75,000) 4,711,000 21,035,000 8,935,000

Less: Income tax expense 5,284,000 4,671,000 6,693,000 4,436,000
Profit/(Loss) from continuing operation (5,359,000) 40,000 14,342,000 0
From Operation (1,100,000) (475,000)
From loss on disposal 0 (2,944,000) 0 0
Profit/(Loss) for the financial
year (6,459,000) (3,379,000) 14,342,000 4,499,000

16
Trend Index Analysis

2016(%) 2017 (%) 2018(%) 2019(%)

Revenue 100.00 82.88 95.81 71.84
Cost of sales 100.00 82.15 93.05 70.44
Gross Profit 100.00 87.42 112.87 80.56
Other income 100.00 65.10 173.12 226.23
Less: Administrative
expenses 100.00 75.00 73.07 66.06
Operating profit 100.00 166.90 412.10 213.65
Less: Finance cost 100.00 100.98 97.92 82.50
Share of result of associate, net of tax 100.00 0.00 0.00 0.00
Profit/(Loss) before tax 100.00 -6281.33 -28046.67 -11913.33
Income tax expense 100.00 88.40 126.67 83.95
Profit/(Loss) from continuing
operation 100.00 -0.75 -267.62 0.00
From Operation 100.00 43.18 0.00 0.00
From loss on disposal
Profit/(Loss) for the financial year 100.00 52.31 -222.05 -69.65

17
3 ANALYSIS AND FINDINGS
3.1 FINANCIAL RATIO ANALYSIS
• Liquidity Analysis

The current ratio for FITTERS Diversified Berhad during year 2019 (2.02 times) is more liquid as compared
to previous years which slightly decrease on 2016 (2.23 times), 2017 (1.91 times) and 2018 (1.18 times). It
reflects the company has the ability to pay its short-term obligation on time during last three years. The acid
test ratio in 2019 (1.04 times) is more liquid compared to previous year which slightly decrease on 2016 (1.98
times), year 2017 (1.63 times) and 2018 (1.01 times). However, the company has no ability to pay its short-
term obligation on time without relying on inventories during last three years. For the net working capital in
year 2019 (RM 131447000) is lower than previous years which slightly decrease and increase on 2016 (RM
199529000), 2017 (RM 127899000) and 2018 (RM 138806000). It reflects the company less liquid and able
to pay its short-term obligation during last three years. Overall, the company’s assets are more liquid in 2019
compared to the last three years.

• Efficiency Analysis

The average collection period ratio for FITTERS Diversified Berhad during year 2019 (114 days) which is
not efficient in collecting debt compared to previous years on 2016 (57 days), 2017 (79 days) and 2018 (115
days). It shows company as problem in collecting debt as compared to last three years. The account receivables
ratio for the company in year 2019 (3.15 times) is more effective compared to previous years which slightly
decrease on 2016 (6.23 times), 2017 (4.55 times) and 2018 (3.12 times). It shows the company more effective
on collecting their receivables compared to last three years. The inventory turnover ratio for the company
during year 2019 (1.72 times) which is less efficient compared to previous years which keep decreasing on
2016 (8.90 times), 2017 (6.15 times) and 2018 (3.43 times). It shows the company less efficient in utilizing
the inventory to generate sales compared to last three years. The fixed assets turnover ratio for the company
in year 2019 (1.12 times) is less effective compared to previous years which slight decrease and increase on
2016 (1.51 times), 2017 (1.21 times) and 2018 (1.36 times). It reflects the company less effective to utilizing
fixed assets to generate sales compare to last three years. The total assets turnover ratio for the company
during year 2019 (0.48 times) which is not effective in managing their assets in order to generate sales
compared to previous years which slightly decrease and increase on 2016 (0.60 times), 2017 (0.55 times),
2018 (0.58 times). Overall, the company tend to be less effective in managing their assets compared to last
three years.

18
 • Debt Analysis

The debt ratio in 2019 (28.89%) is more favorable compared to previous years which shows slightly decrease
on 2016 (40.92%), 2017 (37.48%) and 2018 (36.56%). It shows that in 2019, the company faces less financial
risk in order to finance assets compared to last three years. The debt-to-equity ratio for the company in 2019
(40.63%) more favorable compared to previous years which show slightly decrease on 2016 (69.29%), 2017
(59.96%) and 2018 (57.64%). It reflects in 2019, the company less volatile and lower financial risk in
financing the firm’s operation relative to equity compared to last three years. The time interest earned ratio
for the company in 2019 (2.74 times) is less favorable compared to previous years which shows slightly
increase on 2016 (1.06 times), 2017 (1.75 times) and 2018 (4.46 times). It reflects in 2019, the company less
able to meet loan requirement and higher risk of default compared to last three years. Overall, the company is
facing less financial risk in year 2019 compared to last three years.

• Profitability Analysis

The gross profit margin in 2019 (15.59%) is less efficient compared to previous years which shows slightly
increase on 2016 (13.90%), 2017 (14.66%) and 2018 (16.38%). It shows the company has less able to generate
profit from company sales compared to last three years. The operating profit margin in 2019 (5.34%) is less
efficient compared to previous years which shows slightly increase on 2016 (1.80%), 2017 (3.62%) and 2018
(7.73%). It shows the company has less productivity and it is able to generate less profit compared to last
three years. The net profit margin in 2019 (1.71%) is less efficient compared to previous years which shows
slightly increase on 2016 (-1.76%), 2017 (-1.11%) and 2018 (4.09%). It reflects the company less efficient to
gain net profit in year 2019 compared to last three years. The return on assets ratio in 2019 (0.82%) less
effective compared to previous years which show slightly increase on 2016 (-1.06%), 2017 (-0.60%) and 2018
(2.39%). It shows in 2019, the company has lower return on their investment to assets compared to last three
years. The return on equity ratio in 2019 (1.15%) is less efficient compared to previous years which shows
slightly increase on 2016 (-1.79%), 2017 (-0.97%) and 2018 (3.76%). It shows the company is has lower
return to shareholders compared to last three years. Overall, the company is less productive to earned profits
from the net sales in year 2019 compared to last three years.

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3.2 COMMON SIZE ANALYSIS

According to common size income statement in 2019, FITTERS has higher cost of revenue (84.41%) than
Petronas (72.78%) which led to FITTERS has lower gross profit (15.59%) than Petronas (27.22%). FITTERS
have higher expenses (12.62%) than Petronas (10.62%). As result, FITTERS has lower operating profit
(5.35%) than Petronas (19.79%). This makes the profit of the financial year for FITTERS (1.71%) lower than
Petronas (17.07%).

Next, based on common size financial position in 2019, FITTERS has lower non-current assets (52.56%)
compared to Petronas (59.43%) which shows FITTERS assets on property, plant and equipment (41.86%)
lower than Petronas (52.70%). However, FITTERS has higher current assets (47.44%) compared to Petronas
(40.57%). It is because FITTERS have higher proportion of inventory (22.92%) than Petronas (4.27%).

Lastly, FITTERS have lower total equity (71.11%) than Petronas (78.58%), but it shows that FITTERS tend
to rely less on equity rather debt. As result, it shows that FITTERS has higher total liabilities (28.89%)
compared to Petronas (21.42%).

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3.3 COMPARATIVE ANALYSIS

In trend index analysis on financial position, 2016 is the base year and 2017, 2018 and 2019 is the comparison
year. Total assets decreased by RM55,951,000 in 2017 which decreased to 90.85 percent from 100%. In 2018,
Total Assets increased to 98.36%, but still below the based year and continued to decrease in 2019 to 89.70%
which is 10.3% difference from the base year. The company shows a great management in their liabilities by
decreasing their liabilities value from 100% in 2016, 83.22% in 2017, 87.90% in 2018 and major decreased to
63.34% in 2019. The company manage to reduce their liabilities by RM91,705,000 in 2019 compared to their
base year 2016.

Based on the trend index analysis on income statement, 2016 is the base year and 2017, 2018 and 2019 is the
comparison year. Although the company shows a significant decrease from their revenue, the company manage
to reduce their cost of sales and by 2019, the company reduced their cost of sales to 70.44% from 100% in 2016.
Company operating profit also shows a great improvement where 2018 record the greatest increment which is
412.10% which is 312.10% increase compared to 2016. In general, 2018 is a good year for the company because
their company managed to overcome their net loss and record a -222.05% changes compared to 2016. In 2016,
the net loss is -RM6,459,000 and the net profit in 2018 is RM14,342,000.

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4 CONCLUSION

Based on the analysis of FITTERS Diversified Berhad above, we can conclude that the company shows increasing
trend from year 2016 to 2018. The company also rely more on equity which the amount of debt for company is
less than 50%. It means that this company can run well even it is relying on the equity which this is the strength
of the company. The lower the debt amount, the lower the risk of financial problems.

The profit for the company also improved from 2016 to 2018 which it shows that company started to growth in
the market. The weakness for company is the growth only shows for the year 2016 to 2018 but for year 2019, it
started to growth slowly. The gap of profit for year 2018 and 2017 is quite big. It shows that 2018 is highest profit
for the company can generate in the 4 years.

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5 APPENDICES

Figure 1.0 – FITTERS Diversified Berhad Income Statement for Year Ended 31 December 2016

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Figure 1.1 – FITTERS Diversified Berhad Statement of Financial Position for Year Ended 31 December 2016

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Figure 1.2 – FITTERS Diversified Berhad Statement of Financial Position for Year Ended 31 December 2016

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Figure 1.3 – FITTERS Diversified Berhad Notes to Statement for Year Ended 31 December 2016

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Figure 2.0 – FITTERS Diversified Berhad Income Statement for Year Ended 31 December 2017

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Figure 2.1 – FITTERS Diversified Berhad Statement of Financial Position for Year Ended 31 December 2017

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Figure 2.2 – FITTERS Diversified Berhad Statement of Financial Position for Year Ended 31 December 2017

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Figure 2.3 – FITTERS Diversified Berhad Notes to Statement for Year Ended 31 December 2017

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Figure 3.0 – FITTERS Diversified Berhad Income Statement for Year Ended 31 December 2018

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Figure 3.1 – FITTERS Diversified Berhad Statement of Financial Position for Year Ended 31 December 2018

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Figure 3.2 – FITTERS Diversified Berhad Statement of Financial Position for Year Ended 31 December 2018

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Figure 3.3 – FITTERS Diversified Berhad Notes to Statement for Year Ended 31 December 2018

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Figure 4.0 – FITTERS Diversified Berhad Income Statement for Year Ended 31 December 2019

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Figure 4.1 – FITTERS Diversified Berhad Statement of Financial Position for Year Ended 31 December 2019

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Figure 4.2 – FITTERS Diversified Berhad Statement of Financial Position for Year Ended 31 December 2019

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Figure 4.3 – FITTERS Diversified Berhad Notes to Statement for Year Ended 31 December 2019

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Figure 5.0 – PETRONAS Chemicals Group Berhad Income Statement for Year Ended 31 December 2019

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Figure 5.0 – PETRONAS Chemicals Group Berhad Statement of Financial Position for Year Ended 31
December 2019

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